H1 trading update to 1 August 2021
IMMEDIATE RELEASE 3 August 2021
A.G. BARR p.l.c.
("A.G. BARR")
A.G. BARR produces and markets some of the UK's leading drinks brands, including IRN-BRU, Rubicon and Funkin.
H1 trading update to 1 August 2021
Revenue for the 27-week first half of the financial year is expected to be c.£134m, c.18% ahead of the prior year (26 weeks to 25 July 2020 : £113.2m). On a like-for-like 26-week basis revenue is expected to be up c.13%.
Trading has been strong across both our business units, Barr Soft Drinks and Funkin. This performance has been driven by a combination of brand-led initiatives and market factors, some long-term and structural and others more one-off, resulting in a short-term boost to operating margin, which we would not expect to be replicated in H2. Full year operating margin is still anticipated to be slightly ahead of the prior full year.
Barr Soft Drinks
Over the past 6 months we have benefited from recovery in "on the go" consumption, growing volume and improving product mix, while our "at home" sales have remained strong, as they have done throughout the COVID-19 pandemic. Recent new product launches are performing well, with positive consumer feedback and encouraging customer listings.
The energy sub category, in particular, continues to outperform the total soft drinks market and our focus on innovation in this area, primarily Rubicon RAW Energy, has made a very positive start. We plan to accelerate our commercial investment in Rubicon RAW Energy across the balance of H2.
Funkin
The response to the COVID-19 pandemic has been especially challenging for the hospitality sector, however we are pleased to see positive momentum as consumers return to hospitality venues. Funkin has delivered a strong H1 performance in the on-trade driven by both customer restocking and an increase in cocktail rate of sale.
During the various lockdown periods, Funkin capitalised on the increase in demand for cocktails at home, through both traditional retail and direct to consumer channels, becoming the UK's No.1 ready to drink cocktail brand*. Our "at home" cocktail sales have continued to grow across the first half of the year, supported by a continued strong rate of sale and an increasing level of brand distribution. We will accelerate our investment in H2 as we continue our strategy to further develop Funkin as a consumer brand.
Operations
We continue to put the safety and wellbeing of our employees and customers at the heart of our business.
Our operational resilience has been excellent across the first half of the year. In recent weeks, however, we have seen increased challenges associated in part with the COVID-19 pandemic, across the UK road haulage fleet, impacting customer deliveries and inbound materials. In addition, the risks associated with the wider labour pool and the current COVID-19 pandemic response, are areas we continue to monitor closely.
We believe the commitment and capability of our workforce and supply base will stand us in good stead in these uncertain times.
Outlook
Our positive first half performance reflects the underlying strength of the business and the encouraging performance of recent innovation launches as well as a number of non-recurring factors, in particular customer restocking, deferred overheads and marketing investment phasing choices.
We reiterate our guidance from 20 July 2021 that profit for the current 53-week financial year ending 30 January 2022, is expected to be slightly ahead of the performance delivered in the 52-week year prior to COVID-19 (2019/20 profit before tax : £37.4m).
Our full year performance expectations take into account the one-off nature of some of the H1 benefits and our anticipation of increased cost inflation later in the year, reflecting the well documented pressure on supply chains and rising commodity prices.
We remain committed to our plan to recommence dividend payments during the current financial year.
Roger White, Chief Executive, commented:
"We are pleased with the performance of the business in the year so far. There is good momentum behind our core brands and we have re-entered the growing big can energy category with our Rubicon RAW Energy range.
We plan to increase our brand investment in the second half of the year, building on our progress to date. While uncertainty remains, we are confident in delivering our plans across the balance of the year and meeting our recently revised full year profit expectations."
For more information, please contact :
A.G. BARR 0330 390 3900 Instinctif Partners 020 7457 2010/05
Roger White, Chief Executive Justine Warren
Stuart Lorimer, Finance Director Matthew Smallwood
Next update : Interim Results - September 2021
* Nielsen pre-mixed alcoholic drinks total coverage value sales data MAT 03/07/2021
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